Tips for raising Money Savvy Kids

If you want your kids to be financially savvy, the authors of a new book say it’s important to start young.

Money Savvy Kids, which was released Saturday, delves into budgets, first bank accounts and even smart spending.

By:Carys MillsStaff Reporter, Published on Mon Jan 07 2013

If you want your kids to be financially savvy, the authors of a new book say it’s important to start young.

“You can’t go at this as an academic exercise, you’ve got to do it in such a way that the kids don’t even realize they’re learning,” said personal finance guru Gordon Pape, who co-authored Money Savvy Kids with his daughter, Deborah Kerbel. The book, which was released Saturday, delves into budgets, first bank accounts, savings and more.

Pape and Kerbel shared some of their top tips on teaching kids financial literacy.

Money talks

It sounds basic but not every family openly talks about money and the authors say it’s essential for kids to start learning about finances.

“So many families are very tight lipped when it comes to money and money management,” Pape said. “So the kids grow up, as I did, kind of in a world of ignorance.”

It’s a matter of honestly answering their questions, he said. But for parents who struggle with budgeting and other basics, it’s best to brush up before the kids grow up.

“You can’t teach kids what you don’t know,” Pape said.

The book even includes a quiz to help parents gauge how money savvy they are.

Play games

Teaching kids about money has to be fun, whether it’s through practical experience, books or games, Pape said.

Kerbel, the mother of 7-year-old Dahlia and 10-year-old Jonah, now has found some books are particularly good at teaching money lessons, while still being fun. The Lemonade War, for example, is about siblings opening up a stand, but includes business concepts and math problems.

For younger kids, starting at around age 5, it’s possible to play basic games including coin recognition. “First they have to learn what each coin is,” Kerbel said, listing off the animals and symbols on each coin, including the nickel’s beaver.

Give an allowance

While vacationing at Disney World, Kerbel and her husband decided to experiment by giving temporary allowances to their son and daughter, who were 9 and 6 at the time.

They gave them $20 each per day while on vacation, which was to pay for any souvenirs or treats the kids wanted while away.

Kerbel said it might sound like a lot of money but it had to reflect Disney prices and her kids knew the limit was strict. If they wanted something more expensive, they had to save and budget their allowances.

“All of a sudden they weren’t begging us to buy them things,” she said, adding her younger child needed some help with calculating. “They were budgeting, they were making calculations, they were planning ahead.”

Charity case

Partially based on the Disney experience, Kerbel decided to give her children regular allowances about six months later.

As well as using online tools to track how much each child has spent of their allowances — a dollar per grade each week — Kerbel made it mandatory for both children to donate some to a charity. They’ll be part of deciding what charity it should go to, she said.

“It’s so important for kids to understand that money isn’t just about what you can get for yourself,” she said. “Sharing’s a big part of it.”

Even if a family doesn’t give an allowance, Kerbel said substituting gifts with donations can be a way to teach the idea.

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